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This is a barebones definition of how economics works.
Taxation
Capitalism: An economic system in which the means of production are owned by private individuals.
Socialism: An economic system in which the means of production are owned collectively
- Supply and demand: The concept of supply and demand is the very foundation of any economy. In a market economy, price is directly correlated with demand and inversely correlated with supply. These three factors lead to a self correcting market (over the long run) which prevent surpluses and shortages. For example, if supply goes up because the barrier of entry is down, the market will initially be flooded with more suppliers but this will create a competitive market as price goes down as well. Either the number of suppliers will decrease or the increase in customers will balance everything out. If the number of people interested in a product goes down, the supply will go down with it and likely the number of suppliers as well.
- Goods: Items which satisfy human wants
- Services: Non material things which there is demand for
Taxation
- Income tax: A tax on labor
- Flat tax: Everyone pays the same percentage
- Progressive tax: There are different brackets with wealthier people paying more.
- Capital gains tax: A tax on interest
- Wealth tax: A tax on total wealth (land + capital), both profitable and unprofitable.
- Property tax: A tax on stationary assets.
- Land value tax: Similar to the property tax but only on land rather than on anything built on it. It's a tax on rent.
- Sales tax: A tax on consumption
- Value added tax: Similar to the sales tax except every additional step gets taxed.
- Tariff: Tax on foreign goods
- Severance tax: Tax on the removal of natural resources
- Estate tax: Similar to a wealth tax except it's levied after death
- Head tax: A very simple kind of tax in which everyone pays the same amount simply for living.
- Factors of production: Major categories of what makes the economy
- Land: Natural resources such as extractable minerals, wood, water, and land itself
- Labor: Human input
- Capital: Anything made by man
- Profit: Return on investment. Revenue minus cost
- Rent: profit from land
- Wage: profit from labor
- Interest: profit from capital
- Means of production: Anything used to produce goods and services. Usually includes land and capital.
Capitalism: An economic system in which the means of production are owned by private individuals.
- Free market capitalism: What most people think of as capitalism
- Social democracy: Capitalism but with social programs
- Georgism: Land value should be taxed because doing so will not reduce the amount of land and would actually deter land speculation.
- Corporatism: An economic system in which state and corporate interests are intertwined
- State capitalism: The state calls the shots. It's still capitalism because the economy is in private hands (ex: China)
- Corporatocracy: The corporations influence decisions made by government.
Socialism: An economic system in which the means of production are owned collectively
- Planned economy: An economy in which the distribution of goods and services are decided by a specific group rather than by the market
- Centralized planning (command economy): Decisions are made by the state, usually at the national level (ex: USSR, Maoist China, and North Korea).
- Decentralized planning: Economic decisions are made by communities rather than by the state.
- Social market economy: The economy is dominated by worker coops rather than traditional businesses
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